Dark money is shady business
Dark money is shady business. Although this type of political expenditure has been around for a long time, the U.S. Supreme Court’s decision in Citizens United opened the floodgates. Some reports indicate $8.6 million in dark money seeped its way into Arizona’s election process.
“That is an incredible sum of money,” Assistant House Democratic Leader Bruce Wheeler, D-Tucson (District 10), said. “Money influences elections and people have a right to know who spending in our state.”
But dark money makes that difficult. This kind of campaign spending allows certain entities to spend money in political causes without revealing where the money came from. It is clouding the election process. Right now, Arizona has few restrictions on dark money. Democrats at the Arizona Legislature have proposed some reforms that will help shed some light on this shadowy subject.
Wheeler and Senate Democratic Whip Martín Quezada, D-Phoenix (District 29), are introducing a package of identical reform bills in the House and the Senate. These bills were developed from recommendations from former Attorney General Terry Goddard.
This legislation would require the four largest contributors and any large contribution from out of state to be included and clearly displayed on the disclaimer statement of corporate independent expenditures. It would also require corporations, limited liability companies and labor organizations that make independent expenditures to file campaign finance reports if they receive contributions for their expenditures. This is what political committees must do.
This reform would revise the “paid for by” disclaimer for political committees to include the names and telephone numbers of the three largest contributors including corporations, LLCs and labor organizations. Currently, the law only requires the disclaimer to include the three largest political committees.
This legislation would change the definition of “conducting affairs” for out-of-state businesses to include spending money for the purpose of influencing the outcome of an election in Arizona. It would prohibit foreign companies from spending money to influence elections until they are authorized to do business in Arizona and would place the same restrictions on an LLC. The purpose of this legislation is to require any out-of-state entities to register with the corporation commission before they make independent expenditures.
This reform would authorize the Citizens Clean Elections Commission to conduct random audits of corporations, LLCs and labor organizations that make independent expenditures. The audit would include a review of notifications, related documentation and other financial records to determine whether the entity is complying with Arizona law related to corporate independent expenditures. The audit would be confidential unless the commission finds that a violation has occurred, in which case the commission shall notify the Secretary of State’s office of the violation. This audit provision is intended to ensure corporations are complying with current law and mirrors the audit process that the Citizens Clean Elections Commission conducts for candidates.
"With the recent judge's ruling that throws out the state's definition of political committee, we have the opportunity to make meaningful changes to our disclosure laws," Quezada said. "Voters are tired of the presence of anonymous money in their elections and they deserve to know who is buying their elected officials. The sad reality is that our proposed legislation to eliminate dark money from our state will most likely never see the light of day - kept in the dark just like the people of Arizona."
There are several other bills that Democrats have introduced that would weaken the influence of dark money in the state. Rep. Debbie McCune Davis, D-Phoenix (District 30), wants to correct the damage done by Citizens United by introducing HCR 2031, which is intended to lead to the repeal of Citizens United and establish that corporations are not people and money is not speech.
Senator Steve Farley, D-Tucson (District 9), introduced SB1101, which is identical to the bill that Secretary of State Michelle Reagan introduced as SB1403 last year when she was still in the Senate.
ASU's Morrison Institute for Public Policy described that bill in a February 2014 report:
"(It) would require independent expenditure committees in state and local elections to reveal the “identifiable contributors” to their campaigns, even though these funds came to them through a chain of organizations. The “identifiable contributor” noted in the bill is the specific person(s), corporation(s), or union(s) from within or outside of Arizona that makes the initial donation, not some vaguely named entity that passed the funds along. The independent committee would also be required to reveal the name of the leading three financers in its campaign advertisements, literature and similar materials.
"A central focus of SB1403 is on Arizona’s many shell corporations or “convenience corporations” that seek to influence elections without revealing the identity of their funders. The bill outlaws attempts to hide the identity of donors by the creation of such entities and by funneling funds from one organization to another. To enforce the law, the Secretary of State, acting upon a complaint, would have wide authority to determine if a group or organization is primarily engaged in electioneering. If so, it would be regulated as a political committee and be subject to disclosure," Farley said.
Additionally, Rep. Ken Clark, D-Phoenix (District 24), has introduced a bill, HB2533, that would require utility companies to disclose contributions made to influence an election. Clark said this reform is necessary because of “what was very likely an unprecedented shift” from utility companies. Many believe that the utility companies were contributing heavily in the 2014 Corporation Commission elections.
“This raises many questions about potential corruption,” Clark said because the Corporation Commission regulates the utility companies. “Regulated monopolies were very likely spending money aggressively in our Corporation Commission election. The public was understandably outraged.”
Clark added that his bill, and the legislation Quezada and Wheeler are offering, would help increase transparency.
“This dark money is terrible for our democracy in Arizona. How can we trust decisions being made by our regulating bodies if the companies they regulate are hiding behind dark money? We should all be calling for more accountability.”